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In Hurricane's Aftermath, a Blowout Portfolio

It's nice to see that most of the companies on the list are relatively small. Larger companies may be so diversified with national or international business that even a lot of south Florida rebuilding business won't affect earnings much.

As an example, a Goldman Sachs report suggested that Home Depot (HD) and Lowe's (LOW) -- national hardware-store chains based in Georgia and North Carolina -- would share a $900 million revenue boost from Hurricane Charley. But Goldman said that the chains typically sell goods at cost after natural disasters, reducing the impact on profits. The report said Home Depot, with annual sales greater than $69 billion, would see revenue grow just 0.8%. Lowe's, with revenue of $33.7 billion, would see revenue growth of 0.7% -- yielding just a 1%-2% gain in earnings per share over the next 12 months.

Citing the Standouts

All of the names on the list have potential, but one that merits special attention is Florida Rock (FRK). Unless you're a contractor or in the middle of a building project, you probably didn't know there was a serious worldwide shortage of cement -- the powdered limestone mixture that mixes with rock, gravel and water to make concrete. The problem is China and its seemingly insatiable thirst for building materials as it scrambles to build its Olympic venues, not to mention factories, roads, dams and apartment houses.

Florida Rock, one of the largest miners, producers and marketers of cement and rock aggregates in the mid-Atlantic region, has been caught in the middle: happy to see higher demand and prices for its products, but at the same time not able to supply enough of it and having projects delayed for months.

In its July earnings report, Florida Rock reported a 43% increase in earnings per share over the same quarter in 2003 on a 27% increase in sales to $251 million, with price increases of 5%-9% for aggregates supplementing favorable weather and construction trends. The company raised its guidance for the rest of the year, and analysts all remarked that an increase in its price-to-earnings ratio was deserved as well.

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